Oregon isn't a very large ARM state, Liudahl noted, and home values neither increased nor decreased as they have in hot sectors of the real estate market (the median home price here is $270,000), but when people are facing an increase as great as 25% to their monthly mortgage payment, something has to be done, and OCCU wants to do it.

With ARMBuster, qualified borrowers may refinance into a 30-year fixed mortgage loan for up to 105% of the home's value, he said, and it doesn't matter if the loan is in a negative amortization state or if there are pre-payment penalties. "We're committed to helping members protect their most valuable asset," said Liudahl. OCCU will get the word out through the real estate agents it currently works with and through the Neighborhood Economic Development Corporation as well as the usual internal marketing vehicles.

Southern Flavor

State Employees' Credit Union in Raleigh, N.C. has started to offer a five-year ARM and All Savers Mortgage, an escape mechanism for members trapped in subprime loans. The ARM allows for 100% financing up to $400,000 with a maximum term of 20 years and is available at the current interest rate of 6.75%. That rate is subject to change only every five years, but it will not change more than 1.5% in each increment and there is a maximum increase limit of 4.5% over the life of the loan. Leigh Brady, senior vice president of education services for SECU noted in a statement that the new products eliminate the huge payment increases that are common in subprime, predatory loans. The CU has found that many members can move from a 30-year subprime mortgage to a 20-year SECU loan without an increase in the monthly payment amount. For consumers, says SECU, that's a big relief.

The All Savers Mortgage is a fixed rate, currently 6.50% with the added opportunity to build a savings account with 100% financing for a 15-year term and maximum loan amount of $400,000. Once the loan is established, a 10% share certificate is financed at the same rate as the loan. Dividends are compounded monthly and stay in the account until it's closed. The money can be released after 10 years, the mortgage is paid off or the balance is below the remaining balance of the mortgage loan.

Phil Greer, senior vice president of SECU's loan administration also noted the conspicuous focus now placed on these mortgages in the mainstream press. Some SECU members opted for these mortgages with other lenders and are now feeling the effects, which makes for severe financial hardship, he said. These new products are the latest in SECU's efforts to help members who suffer "unexpected major life challenges such as spousal death, job loss, divorce or serious family illness," he added. The CU may waive late fees for loans 45-days late instead of the usual 15 days, and make some loan extensions as well.

Chi-Town Backlash?

When the state of Illinois instituted a mandatory mortgage-counseling program at the close of 2006 to educate and prevent residents of largely Black and Hispanic neighborhoods from predatory refinancings it was hailed as a consumer victory. But the program was suspended by Gov. Rod Blagojevich in January after complaints from mortgage brokers and real estate agents who claimed that it limited consumer choices and resulted in reduced transactions. They alleged it was a kind of redlining.

A recent story in the New York Times found that even some counseled homeowners went through with bad loans out of desperation to pay off big credit card, health care or other debts, despite what they'd learned. Now the state is planning to extend the program to all areas of Chicago in order to avoid the charge of race-related redlining. And the state General Assembly is considering legislation to make the counseling rules into law.

Such counseling programs have been the backbone of many credit union-backed mortgage programs. But it may fall on CUs to keep the counseling requirement in force on their own, as both Fannie Mae and Freddie Mac suspended them last year for some affordable housing loans. That decision was based on complaints the agencies received from mortgage companies from which they bought loans, saying they lost business to companies that didn't require the counseling sessions.

Ohio's Task Force

Governor Ted Strickland of Ohio established a foreclosure task force to provide a unified and coordinated statewide response to the dramatic increase in the number of foreclosures in the Buckeye State. He appointed Kimberly Zurz, director of the Ohio Department of Commerce and chair of the Ohio Housing Finance Agency, to serve as chairwoman of the task force. Zurz also serves as chairwoman of the Subcommittee on Responsible Lender Options. John Koslowski of the Ohio Credit Union League is a member of a subcommittee charged with contacting and targeting borrowers in order to avoid foreclosure. "Ohio is either first or second in the nation for number of foreclosures," he told Credit Union Times. "And the highest number of those is in the 2/28 and 3/27 loans, which have very low teaser rates that just explode in two years. These people have just got the wrong kind of credit and they're not savvy enough to know the difference. It's very hard, what with all the small fine print," he said.

Ohio's credit unions are trying to let as many consumers as possible know that there may be other options available, he said, "because once you get past a certain point, usually after 90 days, they can't be helped." It's a crying shame, said Koslowski, because buying a home has historically been the way Americans build equity and accrue savings for retirement, or at least, a big chunk of it. To see them work and pay only to have nothing to show for it seems a crime for which no one is held accountable. And Caveat Emptor doesn't seem sufficient.

The most recent meeting of the task force, which was attended by Becky Hart, OCUL's vice president of public affairs (while Koslowski was in Washington on other business) stepped up the effort, she reported. The Responsible Lender Options to Help Borrowers Subcommittee is looking to hold meetings in August at locations around the state to give Ohioans the opportunity to have their mortgage loan "triaged" and find out where they need to go for help. Lenders and borrowers alike would be invited to the meetings.

The challenge will be getting the word out to homeowners that these meetings are available, Hart noted. Koslowski said that newspapers had done a much better job of writing stories on the subject, but allowed that some local television stations at least covered news of the task force meetings. "The impact of these foreclosures is only expected to increase," Koslowski said.

Golden State

In Riverside, Calif., Altura Credit Union and its CUSO, Patrion Mortgage, LLC, were invited to participate in the state's first Consumer Home Mortgage Town Hall held last month in La Quinta. More than 350 people attended the event seeking information and assistance with their home mortgages.

Governor Arnold Schwarzenegger, in partnership with local legislators and state agencies, initiated the series of Town Hall meetings as part of a three-pronged approach to address the statewide increase in foreclosures, according to a press release sent by California Department of Housing and Community Development Director Lynn L. Jacobs.

On tap for the state are efforts to increase consumer education, launch a new Web site, re-examine enforcement against unscrupulous providers and consider new regulations to ensure consumers understand available loan products. The Town Hall was co-sponsored by Assemblywoman Bonnie Garcia (R-Cathedral City) and was held on Saturday May 19th. Representatives from banks, mortgage brokers and local community groups were also there. Garcia said, "I encourage people not to wait until they are in a crisis–anyone who bought a house in the past three years, is facing foreclosure or is currently looking to buy should attend one of these town halls. Bring your loan documents, delinquency notices or questions and get straight answers from the experts who will be there to help."

Noemi Montes, a loan officer with Patrion who assisted homeowners at the event, said, "Participating in this event made me realize how important my job is to so many people out there. These people needed help trying to save their homes. Most of those I spoke with were in terrible situations, about to lose their home because of increases in their adjustable mortgages and little or no equity." Patrion did refinance several mortgages. "The two-hour event did not give us enough time to help all those who needed it," said Montes. "At one point we had about 15 people in line. We are trying to follow-up and assist as many as possible. But for some the situation is dire," she added. The new bilingual Web site is http://www.yourhome.ca.gov.

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